The shutdown point is the short-run threshold at which a firm is indifferent between producing and stopping in the standard price-taking model. It occurs at the minimum average variable cost. Below that price, producing cannot cover variable costs at any…
What is Net Book Value? Net Book Value, also known as the net asset value, is the value at which the company reports its assets on their balance sheet. It is calculated by netting against its accumulated depreciation. This is…
A corporate guarantee is a guarantee given by a company for another party’s obligation. A parent company may, for example, guarantee a subsidiary’s loan. The guarantor is not automatically an insurer, and the guarantee does not necessarily cover every loss…
The harmonic mean formula for positive values is H = n / (1/x₁ + 1/x₂ + … + 1/xₙ). First, take the reciprocal of each value, add the reciprocals, divide that sum by n, then take the reciprocal of the…
The Laspeyres Price Index is a measure of inflation that compares the cost of a basket of goods and services in a base year to the cost of the same basket in a subsequent year. It is calculated by taking…
What is Paasche Price Index? Paasche Price Index is a price index that is used to measure the price level and cost of living in an economy and to calculate inflation. It was invented by a German Economist, Hermann Paasche.…
What is Annual Return Formula? The annual return formula is the capital gain on an investment generated over 1 year and it is calculated as a percentage of the initial amount of investment. If the return is positive, it is…
What is Autonomous Consumption? Autonomous consumption is the consumption expenditure that occurs when the income levels are zero [1]. This expenditure consists of goods and services which must be purchased even when the individual is broke or has little or…
Promissory estoppel is a legal principle that prevents a person from going back on a promise they made if another person has relied on that promise and acted in a way that would be detrimental to them to change that…
Author: Sarthak Table of Contents What is an Appropriation Account? How does the Appropriation account work? Examples What is an Appropriation Account? In simple words, appropriation is a process of setting aside funds, usually, the profits generated by the company…
The Fisher Price Index formula is a method of measuring inflation that takes into account both the change in the price level of a basket of goods and services, as well as the relative change in the quantities of those…
Short SellWhat is Short Selling? Let’s first understand the basic concept of what is short selling and the pros and cons.In short, selling the sequence of transacting a stock or securities is exactly the opposite. Short selling is a way…
